AMD recently held its Q4 2020 earnings call in which AMD’s president and CEO Lisa Su discussed PC chip, PS5, and Xbox Series X/S shortages when investors asked about the magnitude of supply constraints due to growth and the COVID-19 pandemic.
CEO Lisa Su stated that the company expects chip supply to remain tight until the second half of 2021. This affects the production of PC hardware, Xbox Series X, Xbox Series S and PS5 consoles. According to Lisa Su supply constraints are expected to continue through the first half of 2021 as the chipmaker’s manufacturing partners build more capacity.
The shortages primarily impact all PC gaming CPUs and GPUs, gaming consoles, but mostly the lower end of the PC market.
While AMD saw a strong revenue growth in its business, Lisa Su mentioned that overall demand exceeded the company’s planning, and as a result of this there were supply constraints near the end of the year in the PC and gaming market. AMD expects ‘tightness’ throughout the first half of 2021 until additional production capacity becomes available.
“It’s fair to say that the overall demand exceeded our planning, and as a result, we did have some supply constraints as we ended the year. Those were primarily, I would say, in the PC market, the low-end of the PC market and in the gaming markets”, Lisa Su said during the company’s earnings call.
So expect limited supply of AMD’s PC and console chips until the middle of this year. Shortages for the company’s Ryzen processors are also expected to continue through the first half of 2021 as manufacturing partners continue to build more capacity.
AMD CEO however assured that there is “added capacity” in the second half of 2021 that should hopefully help address this situation.
“And so we do see some tightness through the first half of the year, but there’s added capacity in the second half,” Su said. “And then as in terms of how we — how we think about these things, so for our full-year annual guide, we do have good visibility on both the demand side and the supply side. And that was the basis for the guidance across the businesses.”
Lisa Su also acknowledged the fact that the industry does need to increase the overall capacity levels, and that supply issues are expected to continue for the next several months.
Xbox head Phil Spencer also recently commented on the shortages, saying that Microsoft is building new consoles as quickly as possible. As we already know that AMD supplies chips for Microsoft and Sony’s consoles, and both teams are working hard to meet the high demand of the next-gen consoles.
As pointed out in this slide show, both the PS5 and Xbox Series X rely on custom chips from AMD. Microsoft and Sony’s systems each have Zen 2-based CPUs and RDNA 2–based GPUs. Microsoft forecasts tighter availability as the demand continues to outpace console supply.
A distribution executive recently told CRN that there are supply constraints of AMD’s processors for both servers and PCs.
“We’re hearing of supply issues across the board for both server and desktop,” said the executive who asked to not be identified to speak frankly. “For AMD, orders are being pushed out.”
As CRN reports, AMD’s revenue for the fourth quarter of 2020 was $3.24 billion, roughly $1 billion more than the same period last year or 53 percent higher. That beat Wall Street’s expectations by roughly $220 million while the company’s earnings per share of 52 cents were 4 cents higher than expected.
An AMD representative recently told Tom’s hardware that the company’s inventory values can consist of chips in various stages of production, so it’s most likely that AMD’s increased wafer starts at TSMC has resulted in more chips. However, packaging shortages also continue to affect the supply chain, apart from wafer capacity.
Lisa Su also said that, “demand for Radeon 6000 GPUs is strong, marking the fastest-selling GPU over $549 in AMD’s history, and ASPs are up for both the quarter and the year. The company will launch RDNA 2 GPUs in the first half of 2021.”
On some other news, gaming GPU prices are going to skyrocket in coming months as reported by MyDrivers via HardwareInfo. According to the Chinese website MyDrivers, GPU prices are expected to increase thanks to the increasing prices of the video memory used in them, which includes both the slower non-X GDDR6 and the faster GDDR6X memory.
The memory price increase wave is going to take place after February 12th, when the Chinese New Year is finally over. So, in addition to Nvidia’s RTX 3000 cards, AMD’s RX 6000 series would also be affected. This will affect the current MSRP of these GPUs, which were already selling at a higher price tag on several retailers before.
Stay tuned for more tech news!